ICAP sells 12% stake in Traiana to banks

Move is likely meant to repair / improve ICAP and EBS’s relationship with key FX liquidity banks.

As we have written before, ICAP and its Forex ECN unit EBS have taken steps to repair relations with large global banks that provide FX liquidity at EBS, after complaints by such banks that high frequency traders had an advantage on the EBS platform.

In what we view as another step to tie themselves closer to these important banks, ICAP has sold 12% of its Traiana subsidiary to to seven of Traiana’s leading bank customers — BofA Merrill Lynch, Barclays, Citi, Deutsche Bank, JP Morgan, Nomura, and the Royal Bank of Scotland. Traiana products automate post-trade processing, and it has been one of the bright spots at ICAP of late.

ICAP bought VC-backed Traiana in in 2007 for $247 million, and has since promoted Traiana’s founder Gil Mandelzis to be CEO of EBS. The implied $300 million valuation for Traiana certainly looks good for ICAP, above the value it paid six years ago for the company. (The seven acquiring banks were also granted an option for an additional 20% of Traiana for a price of up to $82.5 million, meaning an even higher valuation of $412 million).

Traiana had revenues of £20 million for the six month period ended Sept 30, 2012, meaning annual run-rate revenues of about $64 million.

Again, we see the main purpose of the deal for ICAP — as put by Gil Mandelzis in the press release — to be “solidifying our partnership with the leading players in the industry”, i.e. large liquidity providing banks.

For the full ICAP press release announcing the deal click here.

For more information on FX and related M&A transactions, including a list of deals dating back to 2006 and valuation comparables, see the LeapRate-Dow Jones Forex Industry Report.


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